Regulators in large U.S. states are moving forward with Net-phoning rules, forcing an inevitable confrontation with federal regulators who believe the industry falls under their jurisdiction.
By pushing ahead with regulation now, states are facing long battles in court with Net-phoning--or VoIP (voice over Internet Protocol)--service providers that believe existing laws don"t apply to them; and later with the Federal Communications Commission, which is expected in the next few months to leave states with very little, if any, regulatory power over Net-based phone calls.
Though small Net-phoning start-ups like Vonage are moving forward unfazed by the unsettled legal and regulatory picture, larger providers that want to play good corporate citizen might be forced to wait the months or years for the regulatory and legal picture to come into focus, industry sources say.
"There will be a collision if the FCC takes a position that"s at variance with a state"s," said Carl Wood, one of the five commissioners on the California Public Utilities Commission.